Amid a major economic downturn, countries in Latin America (LATAM) are increasingly suffering from coin laundering through cryptocurrencies, a new written report says.

Cryptocurrencies like Bitcoin (BTC) have become a major tool of organized criminal offence groups and hackers in LATAM countries, according to a Feb. 27 report issued past threat intelligence firm IntSights.

Titled "The Night Side of Latin America," the written report claims that LATAM countries top the list of the world's worst money laundering nations, while local crypto-related firms apparently lack Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations.

To upshot the report, IntSights partnered with major global blockchain security house CipherTrace and LATAM-focused cybersecurity startup Scitum.

Latin American crypto exchanges are associated with "extremely lax" regulations

According to the study, threat finance has been on the ascension in LATAM countries every bit criminals in the region plow to cryptocurrency to wash big amounts of money. Equally part of the increased crypto-based coin laundering in LATAM, criminals purportedly take reward of insufficient KYC and AML regulation of local crypto services also as global peer-to-peer (P2P) crypto substitution services similar LocalBitcoins, the written report notes.

Specifically, the IntSights' data claims that the vast majority of world'due south illicit crypto funds tend to finish up in Latin American crypto exchanges. According to the report, LATAM-based exchanges are typically characterized with "extremely lax" regulations. The study reads:

"Researchers estimate that later on cryptocurrencies have been cleaned on exchanges, 97 percentage finish up in countries that have extremely lax KYC/AML regulations, with Latin American economies topping the charts."

Equally an example, IntSights cited a major money laundering case with Panama-based payment processing business firm Crypto Capital, which involved at to the lowest degree $350 1000000. Every bit reported by Cointelegraph, Crypto Uppercase's president Ivan Manuel Molina Lee was arrested in October 2022, with enforcement authorities claiming that the seized $350 1000000 was direct tied to money laundering for Colombian drug cartels using cryptocurrency. As reported, Crypto Capital allegedly managed to mislead Bitfinex, one of the earth's biggest Bitcoin exchanges.

P2P crypto exchange services like LocalBitcoins lack AML measures, too

Even so, lack of regulation on local crypto platforms is apparently not the only loophole for criminals in Latin America, IntSights emphasized. The firm outlined that popular Finland-based P2P platform LocalBitcoins saw record surge in transaction volumes beyond the region and especially in Venezuela and Argentina.

Co-ordinate to the research, P2P platforms like LocalBitcoins and Paxful are ofttimes associated with pregnant lack of regulations. The written report reads:

"P2P exchangers typically lack AML programs and perform piffling or no KYC due diligence, which entices criminal actors to utilize P2P versus traditional cryptocurrency exchanges."

In late January, LocalBitcoins was reportedly suspending user accounts in some countries with no warning, subsequently citing "enhanced due diligence procedure."